This invention relates to incentive compensation plans and, in particular, to a computerized incentive compensation plan that is easily implemented and administered.
Employee compensation has almost become a business in itself as corporations try to find innovative and effective ways to compensate employees and provide incentive for further superior performance. Many or all of these plans are subject to government scrutiny because the plans involve stocks, retirement accounts, or some form of deferred compensation in an attempt to minimize the tax consequences of the plan.
Another difficulty with many plans is simply the infinitely variable market conditions that may occur. A plan that is reasonable and effective at the time it was implemented can become wholly inadequate under different economic conditions, e.g. lower interest rates. On the other hand, a plan might equally well become far too generous to the employee, and economically burdensome for a company, under other market conditions. Particularly in the latter situation, it is awkward for a company to change plans once a commitment has been made to a particular plan. Further, it is often quite expensive to design and implement a new plan.
Deferred compensation is, in effect, deferred incentive. It is desired that the payment occur relatively soon after the activity being recognized and rewarded. Another problem with deferred compensation is that an employee can get into a position where the deferred compensation is greater than the employee's current salary. That is, the employee almost has an incentive to leave the company.
Many incentive compensation plans favor individual or direct contributors whereas other plans try to compensate indirect contributors but, in the process, provide insufficient recognition to the direct contributor. It is desired to recognize both direct and indirect contributors.
Many incentive compensation plans are complicated to implement and are administratively burdensome. Preferably a plan could be implemented using existing software, using existing data, and would require as little maintenance, e.g. data entry, as possible. By "existing data" is meant data already in one or more data banks within a company, such as payroll and accounting.
There are many software programs in the prior art that can be customized for a particular purpose by creating and executing "scripts," i.e. short programs written in a high level language that is interpreted by the parent or host program. A script is different from "macro" in that a macro is a series of keystrokes automatically entered when a particular code key or key sequence is depressed. A script is a series of instructions, including conditional instructions, not keystrokes. Database programs such as "Access" and "FileMaker" have scripting capability and provide many other features that enable a user to construct sophisticated, customized programs.
In view of the foregoing, it is therefore an object of the invention to provide a computerized incentive compensation program that can be implemented using existing software and existing data.
Another object of the invention is to provide a computerized incentive compensation program that communicates with existing programs to minimize data entry.
A further object of the invention is to provide an incentive compensation program that is relatively free of government regulation.
Another object of the invention is to provide an incentive compensation program that recognizes both direct and indirect contribution to success for promoting business growth and retaining key employees.